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beerhunter

Estate Agent's Commission

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Being a FTB'er, I've always assumed that when you sell the EA takes a percentage of the sale price as commission.

However this letter in the Observer 'High commission on low-price house sale' as me wondering whether EA's are moving away from a precentage commission to fixed fees?

Using the example in the link above;

- the fixed fee is a percentage of the initial market price (ie 1.75% of 220k = £3850)

- the percentage commision is percentage of the sale market price (ie 1.75% of 208k = £3640)

ie with a fixed fee the EA is "protected" from a falling market (so long as they make the sale)

Ok, in this case they make an extra £210, but it could be used as a strategy to boost their fees :blink:

ie if they knowing overvalue a property by 5%, then they are in affect increasing their fees by 5% :o

I wonder if this is why we are seeing high initial valuations, followed by small cuts in price in attempt to generate some interest?

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Being a FTB'er, I've always assumed that when you sell the EA takes a percentage of the sale price as commission.

However this letter in the Observer 'High commission on low-price house sale' as me wondering whether EA's are moving away from a precentage commission to fixed fees?

Using the example in the link above;

- the fixed fee is a percentage of the initial market price (ie 1.75% of 220k = £3850)

- the percentage commision is percentage of the sale market price (ie 1.75% of 208k = £3640)

ie with a fixed fee the EA is "protected" from a falling market (so long as they make the sale)

Ok, in this case they make an extra £210, but it could be used as a strategy to boost their fees :blink:

ie if they knowing overvalue a property by 5%, then they are in affect increasing their fees by 5% :o

I wonder if this is why we are seeing high initial valuations, followed by small cuts in price in attempt to generate some interest?

If that's the case, I'd tell my agent when the property goes on the market that you'll switch agents if you have to cut the price.

If you switch agents frequently, you effectively get the "percentage of selling price" scenario. I would expect the EAs to treat you like a rabid dog if you do, of course.

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If that's the case, I'd tell my agent when the property goes on the market that you'll switch agents if you have to cut the price.

If you switch agents frequently, you effectively get the "percentage of selling price" scenario. I would expect the EAs to treat you like a rabid dog if you do, of course.

Someone I know of sold a property last summer for 1 mil. He interviewed the agents, gave them 15 minutes each, made them in effect pitch for his business, told them the price he wanted it marketed at and instructed them he would not pay a cent of 5K commission, as in his opinion it was the easiest days work they would ever have and having his property on their books would elevate their local standing. It took 2 months to sell for 1 mil.

I liked the contemptable way he treated the little gobshites quite frankly, he gave them precisely the level of respect most of them are due. ;)

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I was wondering whether there was any research on how estate agents change commision, to see if there is a trend moving to commision based on initial (as opposed to sale) prices.

One of my favourite references for EA information is;

OFT study into the estate agency market in England and Wales

From Annexe B;

9 FEE STRUCTURES

Fee levels

9.1 Respondents were asked to describe their fee structures for sellers. About

a quarter of respondents did so in such broad terms that their replies

were not revealing for the purposes of the research. Nevertheless, some

general trends emerge. It is quite clear from the replies that the vast

majority of estate agents charge fees based upon a percentage of the

actual or expected selling price of the property. About a quarter implied

that their fees were negotiable to some extent, though in most cases

within narrow bounds. Over 40 per cent gave no indication that there

was any flexibility about their charges, and only 6 respondents suggested

that they would tend to charge a lower rate for selling more expensive

properties.

9.2 The issue of flat fees appears to have caused some difficulty for

respondents. Some took it to mean a fixed fee negotiated with individual

clients, which in many cases may simply mean the monetary value of a

percentage fee worked out on the asking price of the house rather than

the eventual selling price. One respondent wrote: 'Example – if

percentage result is £1600 we will round down to £1500, it sounds

better'. Others clearly interpreted the term to mean that they charged

everyone the same percentage fee. The number of agents employing true

flat fees across all clients appears to be very low. Only three respondents

clearly charged flat fees, and all of them appeared to have two levels of

flat fee depending on the price of the property.

9.3 About 20 per cent of respondents said that they charge a minimum fee

for handling cheaper properties.

With so much confussion within the industry, I guess it's impossible for an outsider to find out what they do :(

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I hammered ours down from 2.5% to 1% + VAT, still far too much for the "service" offered.

Imagine plenty will move to a fix fee from now onwards and people will "feel" they are getting a good deal until after the spring flop !

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I hammered ours down from 2.5% to 1% + VAT, still far too much for the "service" offered.

Imagine plenty will move to a fix fee from now onwards and people will "feel" they are getting a good deal until after the spring flop !

I can't wait for Tesco's to start selling houses and force these smarmy twits out of business.

saw a classic EA trick in action today - house across the road has came on the market 2 weeks ago. no viewings till today and two sets of people came to view, the second lot 5 mins after the first lot arrived, so they had to wait until they came out. (both couples in 40's/50's by the way)

suckers....

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You guys moan about 2.5 - 1% comission on estate agency fees.....

Here in the US of A its 6%, take it or leave it !! Now thats a big chunk of change. Plus these guys don't even have ''offices'' that you're used to in UK ie walk by the window and see your property advertised and look at others.

To see a house you normally have to have your ''agent'' with you, which gets 3% of the house sale if you buy it !!! Easy money or what ? I won't moan at the normal 1.25% we've paid on the sale of our homes in UK when we return !

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I can't wait for Tesco's to start selling houses and force these smarmy twits out of business.

saw a classic EA trick in action today - house across the road has came on the market 2 weeks ago. no viewings till today and two sets of people came to view, the second lot 5 mins after the first lot arrived, so they had to wait until they came out. (both couples in 40's/50's by the way)

suckers....

The guy I mentioned in my previous post made all the agents arrive at 9 sharpish, 4 of them. :D Taste of own medicine? ;)

Edited by Converted Lurker

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  • 301 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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